Wow! This year is really flying by
already! I cannot believe that January is almost over.

One thing that hasn’t changed is
that the bills are piling up in the mail. Holy! I receive an
incredible stack-o-bills nearly every day. I’ll have to do a
survey with you on that topic sometime.

Last week I spoke to reporters from
BankRate.com, CBS Marketwatch, and NBC Nightly News about penalty
rates. And in this issue I’ll be answering a reader’s question
on this very topic. Although these high interest rates have been
used against us in the past, it seems that people are finally
starting to feel their effects, certainly enough to attract
attention from the major media.

Question to ask yourself today: “What
can I do to put an extra $20 toward my debt today?”

Regards,
Scott

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READER TIP

Scott,

I have a Providian Credit Card and in
my statement today was an “Important Notice of Changes to Your
Account Agreement.” Among other items is the “if your balance is
$200 or greater, the late fees we may charge are $39.”

After a “holding close call,” I
decided I didn't want to play that game, so now I send my payment
“Certified Mail” requesting a signature and return notification.
Amazingly, it is only taking my payments 3 days to get there and be
posted to my account like it did before. :-)

Thought you might like to know.

Diana

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PENALTY RATES
by Scott Bilker

Scott, My interest was raised to 28%
after “a few” (honestly) late payments. They told me they would
review my info in 6 months. Do you think I have a chance of getting
them to lower my rate? --Paula

Paula,

What’s happened to you, and many,
many others, falls under the “Penalty Rate” or “Default Rate”
clause in your credit card agreement. In the mid- to late-90’s I
started receiving Change of Terms Notices from many credit card
banks informing me that if I missed a couple payments they’d raise
my rate to 29.99% or even higher!

Mary Jane borrowed $9,200 to buy a
used car. She made equal monthly payments for 3 years and that paid
off the loan in full. After that time she added up how much she paid
in total to the loan. She was surprised to find that 14.81% of the
total amount she paid back over the course of 3 years were interest
charges for the loan! What was Mary Jane’s APR for this loan?

How can you decide how much you have
for bills and expenses when your paycheck varies from one payday to
the next? That's a question a lot of people struggle with.

A few of the occupations that I can
think of off hand that could fall into this category are waitresses
or waiters working for salary and tips, truck drivers that are paid
by the mile and never know how many miles they are going to get, the
self- employed whose business income varies from season to season,
and the list could go on.

Trying to manage your finances with a
steady income is hard enough, but when you never know what your
paycheck will be, it seems almost impossible, but it's not. It is,
however, going to be a little more tricky.

Helping you with your debt is very
important to me personally! If you've been reading my articles, you
know that I always encourage self-help as a first step. However,
being buried in debt can be very overwhelming, which is why you may
want to explore other options.

One of those options is professional,
ongoing help with credit counselors. I've started to personally
check out certain companies so I can recommend the ones that are
worth considering!

I cannot stress enough the importance
of periodically checking your credit report! Banks are not the only
ones that look at this “financial résumé,” employers,
insurance companies, and many other people will pass judgement on
you based on your credit history.

Buying a car can be both exciting and
intimidating. You land on the lot, looking to get behind the wheel
of the shiny new SUV -- convertible--sedan--sportscar you had seen
in the flashy TV commercial. Oh, wow...they have the color you want,
with the features you want....it is a match made in heaven! Sign me
up, I am ready to ride home in my dream car, right? WRONG! STOP!
Take a breath. Aside from a home, this is going to be one of the
largest purchases you make. The wrong choice could spell disaster
for you down the road, while if you know what you are doing, you
could find yourself on Easy Street.

To test your automotive aptitude, I
have put together a 10- question quiz on car buying and consumer
rights, based on the myths and misconceptions we hear the most. Take
out a number 2 pencil and see how well you fare:

TRUE OR FALSE

1) If I buy a car and something goes
wrong with it, I have three days to return the car. It's a law.

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any person or entity with respect to any loss or damage caused, or
alleged to be caused, directly or indirectly by the information
contained in this email newsletter and/or at the DebtSmart.com web
site. The information, methods and techniques described may not work
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